Empirical Economics

, Volume 57, Issue 5, pp 1751–1782 | Cite as

An empirical analysis of entry and location decisions by bars and liquor stores

  • Yi Deng
  • Gabriel PiconeEmail author


We analyze the entry and location decisions of bars and liquor stores using a spatial game-theoretical framework. We first estimate a one-industry location game where we model bars and liquor stores separately. We then estimate a two-industry location game where we model bars and liquor stores jointly. The model allows for two contradictory effects: a competition effect and a spillover effect. Estimation results reveal a strong negative competition effect for both bars and liquor stores. However, bars appear to benefit from a substantially positive spillover effect. We also find that bars and liquor stores compete with each other. For example, an additional liquor store in a location decreases the probability of a new bar opening in that location and vice versa.


Location games Competition and spillover effects Alcohol establishments 


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Federal Trade CommissionWashingtonUSA
  2. 2.Department of EconomicsUniversity of South FloridaTampaUSA

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